January 28, 2010---a training seminar aimed at strengthening IPRCC’s capacity building was held in IPRCC’s meeting room. A presentation on “Trade Liberalization” was delivered by Prof. Wu Laping from the School of Economics and Management at China Agriculture University. His presentation covers the following seven parts:

First, the Theoretical Thinking of Trade Liberalization
In this part, the discussion was mainly focused on trade liberalization and economic integration.
Free trade is a long term trend. It is able to promote the resources distribution, explore the comparative advantages in different regions, pursue trade efficiency, speed up the capital flows, and promote the process of globalization and regional integration. Prof. Wu historically overviewed the origins of “Free Trade” and “Free Trade Agreement” and the practice of the two terms since the end of the World War II. FTA mechanism is centred by America, Europe and Asia-Pacific. Free trade is due to the development of bilateral and multilateral relations. The purpose of free trade is to encourage competition and meet the domestic growth demands.

Second, the Impact of Free Trade
Free trade has a direct impact on price equilibrium, social welfare and income. For different group of people, free trade is able to promote labor transfer from import industry to export industry, improve resources distribution and create opportunities for the people with low incomes to gain market access.

Third, the Impact of Free Trade on Poverty
Trade liberalization is a process of optimizing resources and reallocating profit. It has significant impact on the poor as measured by income, the price of import and export, employment, government fiscal income and poverty reduction plan, investment, innovative incentives and short-term risks etc.

Fourth, the Impact of Trade Liberalization on the Price of Agriculture Products
Free trade does improve the price of agriculture products such as rice, vegetables, fruits and water products. China has a comparative advantage on the above products though the price of the majority of agriculture products will see a drop. Generally, free trade does lead to the rise of the food price though the price of the agriculture products will drop. Agriculture output will have a slight increase.

Five, Analytical Studies of Free Trade on Economic Growth and Income Distribution
A study had been conducted during the years of 1978-2003, with a focus on the impact of free trade on the economic growth in agriculture sector. The findings show that free trade does promote income distribution.

Six, the Impact of Trade Liberalization on Rural Poverty
Though agriculture sector can benefit from trade liberalization but it is not all rural households that can get the same. Usually, rural households located in the West and North China face negative repercussions from free trade.

Seven, China’s Future Choice
China still faces huge challenges especially in the shortage of natural resources including land, water and energy. This will press China to find opportunities for searching resources in foreign market. Yet, due to the surplus of labour force, China still has the comparative advantage in exporting labour-intensive products. Meanwhile, there are opportunities remaining there. China has joined WTO, and there will have more chances for China to sign FTA through strengthening bilateral and multilateral relations. In addition, foreign exchange reserve remains strong, and Chinese currency has secured a good performance in the recent financial crisis. All the above pre-conditions reveals  that China could continue to make difference in free trade market.